Tullow Oil (LON:TLW) shares fell around 3% in early deals as it cancelled the final dividend for 2014 and, as expected, reported its first loss for fifteen years.
Depressed oil prices contributed to a 16% drop in revenues to US$2.2bn, while gross profit reduced by about 30% to just over US$1bn, and the pre-tax net loss amounted to US$2bn.
Some US$1.6bn was written off Tullow’s exploration assets, and there were further impairments totalling US$596mln and a US$482mln loss was marked against asset disposals in Uganda.
As previously announced, capital spending for 2015 has been cut back to US$1.9bn, and of that just US$200mln is earmarked for exploration. The remaining exploration budget will pay for wells in Kenya, Norway and Suriname, the company said.
Tullow’s produced an average of 63,400 barrels (net) of oil per day from its operations in West Africa during 2014. In the current year it forecasts net production between 63,000 and 68,000 barrels per day.
"2014 was a difficult year for our industry and a challenging one for Tullow as our results today demonstrate,” said chief executive Aidan Heavey.
“In response to this, and the fall in the oil price, we have reset our business and are focusing our capital expenditure on high-quality, low-cost oil production in West Africa.”